Families First Coronavirus Response Act
In response to COVID-19, H.R. 6201 was signed into law by President Trump on March 18, 2020. The bill expands the Family Medical Leave Act of 1993, requires covered employers to provide paid sick leave to qualified employees, and offers new tax credits to employers providing sick and medical leave.
The new law applies only to days occurring during the period beginning on a date selected by the Secretary of the Treasury which is during the 15-day period beginning on the date of the enactment of this Act, April 2, and ending on December 31, 2020.
Covered employers are required to provide each qualified employee paid sick time to the extent the employee is unable to work (or telework).
Emergency Family and Medical Leave Expansion Act
The Family and Medical Leave Act of 1993 has been expanded to include “Public Health Emergency Leave”. The amendment aims to assist those employees with a need for leave due to COVID-19 to care for their minor children.
All employees of covered employers, defined below, who have been employed for at least 30 days qualify for Public Health Emergency Leave if they have a qualifying need to care for minor children whose school or place of care is closed or unavailable due to COVID-19.
Covered employers are those with fewer than 500 employees.
The Act allows for the exclusion by an employer of health care providers and emergency first responders from receiving Public Health Emergency Leave. The Act also exempts small businesses with fewer than 50 employees from the additional provisions if the imposition of such requirements would jeopardize the viability of the business as a going concern.
Public Health Emergency Leave provides the following:
- The first 10 days for which an employee takes leave may consist of unpaid leave, but see the requirements for paid sick leave for the first 10 days
- An employee may elect to substitute any accrued vacation leave, personal leave, medical or sick leave for unpaid leave
- An employer shall provide paid leave for each day of leave that an employee takes after taking leave under such section for 10 days
- An employee shall not be paid less than two-thirds of an employee’s regular rate of pay, and the number of hours the employee would otherwise normally be scheduled to work
- In no event shall such paid leave exceed $200 per day and $10,000 in aggregate per employee
- This Act is set to expire on December 31, 2020
Requirement for Paid Sick Leave
- The employee is subject to Federal, State, or local quarantine or isolation order related to COVID-19
- The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
- The employee is experiencing symptoms of COVID-19 and is seeking medical diagnosis
- The employee is caring for an individual who is subject to an order as described in item (1) above or has been advised as described in item (2) above
- The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions
- The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and Secretary of Labor
Except for those employers whose employees are health care providers or emergency responders and may elect to exclude such employees:
- An employee shall be entitled to paid sick leave of 80 hours, for full time employees, or for part time employees, a number of hours equal to the number of hours that such employee works on average over a two week period
- Paid sick leave shall not carry over from one year to the next
- Paid sick time shall be available for immediate use by the employee regardless of how long the employee has been employed by the employer
- An employer may not require an employee to use other paid leave provided by the employer before the employee uses the paid sick time under the above provisions
- Each employer shall post and keep posted, a notice, to be prepared or approved by the Secretary of Labor, of the requirements described in this act
- It shall be unlawful for an employer to discharge, discipline, or in any manner discriminate against any employee who
- Takes leave in accordance with this act
- Has filed any complaint or proceeding under or related to this act
- This Act is set to expire on December 31, 2020
Payroll Credit for Required Paid Sick Leave
The Act provides a refundable tax credit equal to 100 percent of the qualified paid sick leave wages paid by an employer for each calendar quarter. The tax credit is allowed against the employer’s portion of Social Security taxes, and is refundable if the qualified sick leave wages exceed the employer’s Social Security tax liability.
For amounts paid to employees who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to coronavirus, the amount of qualified sick leave wages taken into account for each employee is capped at $511 per day. For amounts paid to employees caring for a family member or for a child whose school or place of care has been closed, the amount of qualified sick leave wages taken into account for each employee is capped at $200 per day. The aggregate number of days taken into account per employee may not exceed the excess of 10 over the aggregate number of days taken into account for all preceding calendar quarters.
To prevent a double benefit, no deduction is allowed for the amount of the credit. In addition, no credit is allowed with respect to wages for which a credit is allowed under section 45S (employer credit for paid family and medical leave).
Credit for Sick Leave for Certain Self-Employed Individuals
The Act provides a refundable tax credit equal to 100 percent of a qualified sick leave equivalent amount for eligible self-employed individuals who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation with respect to coronavirus. For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to coronavirus, the section provides a refundable tax credit equal to 67 percent of a qualified sick leave equivalent amount.
The credit is allowed against income taxes and is refundable. Eligible self-employed individuals are individuals who would be entitled to receive paid leave pursuant to the Emergency Paid Sick Leave Act if the individual was an employee of an employer (other than himself or herself). For eligible self-employed individuals who must self-isolate, obtain a diagnosis, or comply with a self-isolation recommendation, the qualified sick leave equivalent amount is capped at the lesser of $511 per day or the average daily self-employment income for the taxable year per day. For eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to coronavirus, the qualified sick leave equivalent amount is capped at the lesser of $200 per day or the average daily self-employment income for the taxable year per day.
In calculating the qualified sick leave equivalent amount, an eligible self-employed individual may only take into account those days that the individual is unable to work for reasons that would entitle the individual to receive paid leave pursuant to the Emergency Paid Sick Leave Act.
Payroll Credit for Required Paid Family Leave
The Act provides a refundable tax credit equal to 100 percent of qualified family leave wages paid by an employer for each calendar quarter. As with the credit for qualified sick leave wages, the credit is allowed against the employer’s portion of Social Security taxes, and is refundable if the qualified family leave wages exceed the employer’s Social Security tax liability.
The amount of qualified family leave wages taken into account for each employee is capped at $200 per day and $10,000 for all calendar quarters. To prevent a double benefit, no deduction is allowed for the amount of the credit. In addition, no credit is allowed with respect to wages for which a credit is allowed under section 45S (employer credit for paid family and medical leave).
Credit for Family Leave for Certain Self-Employed Individuals
The Act provides a refundable tax credit equal to 100 percent of a qualified family leave equivalent amount for eligible self-employed individuals. The credit is allowed against income taxes and is refundable. Eligible self-employed individuals are individuals who would be entitled to receive paid leave pursuant to the Emergency Family and Medical Leave Expansion Act if the individual was an employee of an employer (other than himself or herself). The qualified family leave equivalent amount is capped at the lesser $200 per day or the average daily self-employment income for the taxable year per day.
In calculating the qualified family leave equivalent amount, an eligible self-employed individual may only take into account those days that the individual is unable to work for reasons that would entitle the individual to receive paid leave pursuant to the Emergency Family and Medical Leave Expansion Act.
Additional Guidance To Become Available
The Secretary of the Treasury is given broad authority to issue regulations and guidance necessary to carry out the purposes of these sections, including regulations and guidance related to avoidance, compliance and record-keeping relief.